FOR IMMEDIATE RELEASE: Friday, May 3, 2019
CONTACT: Erin Humiston, (972) 874-5139, or erin@ipi.org
DALLAS – Institute for Policy Innovation (IPI) president Tom Giovanetti released the following statement in reaction to the press conference delivered by Gov. Greg Abbott, Lt. Gov. Dan Patrick and Speaker of the House Dennis Bonnen regarding property tax relief:
Based on today’s press conference, it seems clear that the Republican leadership of the Texas Legislature is moving forward with not just limits on property tax increases, but also a tax swap which would raise the state sales tax in order to offset a property tax reduction.
We have no objection in principle to a revenue neutral tax swap that reduces property taxes by increasing consumption taxes, especially since consumption taxes are a less harmful form of taxation. A revenue neutral tax swap is not a tax increase.
The devil is in the details, however. There is absolutely no justification for a net tax increase in Texas, so the tax swap must be designed so that every penny in increased sales taxes absolutely goes to property tax reduction. We’ll watch carefully to see how the proposal is designed. Ideally, the net result would be a property tax reduction of 20 percent or more. We’re skeptical that the Legislature is not looking at this as an opportunity to slip through a net tax increase to help pay for their increased education spending.
To that point, the real tragedy is that the Legislature could have done a bigger reduction in property taxes with a smaller increase in sales taxes had the Legislature not already broken the bank with a gigantic increase in education spending. The Texas Legislature decided to spend an additional $9 billion on education without obtaining any structural reforms in exchange. At the very least, a smaller increase in education spending could have been coupled with structural reforms in education.
We await seeing the specific details of the tax swap proposal, and caution the Legislature against any kind of stealth or back door net tax increase for Texas taxpayers.
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The Institute for Policy Innovation (IPI) is an independent, nonprofit public policy research organization based in Irving, Texas. IPI president Tom Giovanetti is available for interview by contacting Erin Humiston at (972) 874-5139, or erin@ipi.org.